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Boston Area Hospitality Market Report for Q3 2020

 

 

 

Overview

Boston fully reopened in May and is enjoying a summer of improved lodging performance. The market has seem improvement each month in all key metrics so far in 2021, with occupancy gaining ground, and RevPAR steadily climbing its way back. Through July, occupancy was 64.2%, trailing average occupancy for the U.S., which was 69.6%. RevPAR is forecast to increase approximately 60% over 2020, but returning to prepandemic levels of RevPAR is not forecast until 2024 and 2025 and is highly dependent on the full return of groups, business travelers and international tourists.


Boston is set to have a surge of hotel openings in 2021, which is not coming at the most opportune time. There are 12 hotels (1,600 rooms) under construction, with 6 (approximately 1,500 rooms) scheduled to open later this year. The 1,054-room Omni Seaport, scheduled to open in September, accounts for 70% of the rooms left to open this year. Nine hotels have opened already this year, including the 146-room Hampton Inn in Watertown, the 156-room dual branded Fairfield Inn/Towne Place Suites in Medford and the 286-room Newbury Hotel. Formerly the Taj Boston, and a Ritz-Carlton before Taj, the Newbury hotel had been closed since November 2019 and underwent an extensive renovation. It will continue to be positioned in the Luxury segment. Opening rates this summerare over $500.


Asset sales are already off to a brisk pace with 33 hotels sold since the beginning of the year. Starwood Capital sold the 510-room dual branded Aloft and Element at the Seaport to Global Hospitality Investment Group for $142 Million in June. Colony Capital, which hit trouble with its hotel portfolio early on in the pandemic, sold the majority of its hotels assets to Highgate Holdings in March, three of which were in the Boston area. The Residence Inn Foxborough; the Residence Inn Franklin; and a Homewood Suites in Portsmouth, New Hampshire, were part of this portfolio sale. Hersha Hospitality Trust sold its 113-room Holiday Inn Express in Cambridge in March for a competitive price, $32 Million ($283K/key) to private equity firm TPG Real Estate for $32 Million to increase its liquidity

Despite a very challenging operating environment, Boston's diversified economy in life sciences, financial services, and tech, combined with top universities and hospitals, as well as excellent sports and tourist attractions, positions the lodging market better than others to recover from COVID in the near and long term.

 

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Information provided by CoStar.com

 

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